Since they did not adjust Box 1 for the income, you will be taxed on the full amount.
You could argue that the employer adjust Box 1 on your W-2 but I assume they will say the repayment did not occur until 2024.
You can claim a credit on your 2024 return for the repayment.
The way this is done is that you will get the difference in tax on your Tax Year 2024 federal return for the income you paid tax on your 2023 Tax Year return.
Before you file your 2023 return, adjust Box 1 on your W-2 to reflect the repayment and write down the tax liability (1040 line 16)
CHANGE THE W-2 BACK to how it is really reported.
Look at your tax liability listed on your 1040 line 16.
The difference is the amount of the credit you can claim NEXT YEAR when you do your 2024 return.
(So basically you pay too much tax this year, then get that back next year)
You may not be able to adjust for your state tax.
YOU NEED TO USE TURBOTAX DESKTOP NEXT YEAR TO TAKE THE CREDIT.
HERE is a link for details on how to enter that credit NEXT YEAR on your 2024 return.
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